Fremar LLC

Mission Statement: TO ANTICIPATE, MEET OR EXCEED OUR PATRON'S EXPECTATIONS WHILE PROVIDING LOCAL PROFITABILITY.

Grain - Feed - Agronomy - Petroleum         605-648-3941 or Toll-Free: 800-658-3544, Fax: 605-648-3943
General Manager: Steve Domm                                                      Main Office Hours: Monday - Friday    7:30 AM - 5:00 PM
Main Office: 44608 - 273rd Street, Marion SD 57043                                                                             Closed Saturday & Sunday

	Contracts

FLAT PRICE FORWARD Contract

FEATURES

* Shipment at a Later Date * Futures Market Portion Priced Immediately, but on a deferred basis month * Basis Priced Immediately * Payment Upon Delivery

DEFINITION

In this marketing alternative the seller of grain is selling grain at a predetermined price and time in the future. This alternative is suitable when the grain market provides favorable carrying charges, transportation is available and the seller feels prices will decline.

ADVANTAGES

* Allows the seller to capture favorable carrying charges when available in the market.

* Allows the seller the ability to lock-in a favorable price if the seller feels prices will be declining in the future.

* Allows the seller the ability to sell grain in a time frame that supports the seller's work schedule.

* May allow the seller the ability to lock-in premium and discount schedules on grain that will be shipped at a later date.

* Allows the seller to lock in a price before crop is planted or harvested.

* Allows the seller the ability to sell grain at a time when transportation is more readily available.

DISADVANTAGES

* Does not allow the seller the ability to benefit if prices rally in the future.

* May expose the seller of grain to quality deterioration if the seller has to store grain until a later delivery date.

* May expose the seller to quality risk by selling grain that has not been harvested.

* May expose the seller of grain to additional storage costs if the seller has to inventory grain until the contract shipment period.

* Does not allow the seller the ability to arbitrage markets at the time of shipment.

* Payment is usually not received until all grain is delivered per contract specifications.

EXAMPLE On June 1st, FREMAR Coop posts a cash bid of $4.25 for soybeans delivered to Marion in June. The basis is 25 cents under the July futures. You believe that the futures price isn't likely to improve and the basis level is historically narrow so you sell the beans under a Flat Price Forward contract.